Reasons Not to Pay Grant Writing Contingency Fees

Fees for contract grant writers present a constant problem.  Nonprofit agencies often ask something like, “Can I hire a grant writer for a percentage of the grants awarded?”  The answer, simply, is no.  Commissions are considered unethical by almost all professional organizations and funders.  They are also a bad idea for nonprofit organizations. The Association of Fundraising Professionals states in its Code of Ethical Principles and Standards of Professional Practice: “Members shall not accept compensation that is based on a percentage of charitable contributions; nor shall they accept finder’s fees.”  The Northwest Development Officers Association says in its Statement of Ethics:  “Members shall . . . receive compensation based on usual and customary compensation practices in the development field.  Accept no compensation based on a percentage of fundraising goals.”

Grant makers frown upon contingency fees, and many will not fund your organization if they find out you pay grant writers on this basis.  Funders seldom allow a grant writer’s fee to be included in the program budget, and hiding the fee in another line would be dishonest. One foundation representative writes:

“A funder's main concern about fundraiser compensation lies in the answer to this question: what would charitable fundraising look like if it were a standard practice to pay fundraisers on commission?  Public confidence and support of organizations would be undermined.”

Grant writers are professionals who are paid for their time and expertise.  They may be paid either by the hour or by the project. They are not salesmen who get a cut of the proceeds if they close the deal.  Nor are they like personal-injury lawyers, who get a third of the award if they win the case.  Grant writers are skilled professionals who use their expertise to help an organization obtain support for its work.  They should be paid for their time, even if the proposal is not successful.

“But how is that fair?” an organization may ask.  “Why should we pay the grant writer if we didn’t get the grant?  Proposals succeed or fail for a number of reasons, most of which are out of the grant writer’s control.  Among these are:

    • The strength of the project: its feasibility, whether it meets a clear community need, and whether it has a well-planned budget.
    • How well the project fits the funder’s interests.
    • The nonprofit’s reputation, track record and financial history.
    • Relationships: how well the funder knows and trusts the nonprofit’s board and staff.
    • Competition: how many other requests the funder has received.
    • Funds and Timing: how much money the funder has available in this cycle.

Finally, a key element is the quality and persuasiveness of the proposal.  This is the part the grant writer controls, and it is important.  But even the most wonderfully written proposal will often not be funded and might fail if other factors are not in its favor.

Some small organizations might ask “We’re a small organization, just starting out. How are we supposed to pay a grant writer if we don’t have any money?” If you don’t have any money, you’re not ready to apply for a grant.  Grants should never be an organization’s first dollar.  You need to raise funds from individuals first: people who believe in your organization and are willing to make a contribution to get you started.  A good place to begin is your board.

Percentage fees are also a bad deal because, for example, a grant writer may spend many hours writing a long, involved application for $2,500 to a small funder with many requirements, and spend two hours writing a two-page request for $25,000 to a family foundation.  Does it make sense for a grant writer to earn, for example, $250 for the first and $2,500 for the second.

For all these reasons and more, percentages and their ilk are a bad practice for freelance grant writers.  To preserve your reputation, stay away from them.

Recent grants received by our clients include:

$25,000 for a domestic violence agency - for general operating expenses

$25,000 for an organization that assists individuals returning to society after being incarcerated - for general operating expenses

$20,000 for a mental health advocacy agency - for a program that teaches children how to avoid violence and victimization

$10,000 for an organization that provides free legal services for low-income, terminally ill clients - for general operating expenses

The topic of our next blog on Tuesday, October 18th, will be “How to Give Recognition to Grantors.”

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Murray Covens, Principal

North Texas Nonprofit Resources